Economic and Political Consequences of Revenue Composition across States in Nigeria
The recent crash in oil prices and subsequent economic crisis has highlighted the grave consequences that are associated with Nigeria’s heavy dependence on oil revenue and its low tax base. While this pattern is well known for the country, there is limited evidence on the state-by-state variation in oil dependence and economic outcomes. This study aims to fill this gap by examining to what extent reliance on oil provides an explanation for the differences in the abilities of states to weather the economic crisis.
Further, there is a growing body of research that that the more dependent a government is on tax revenues, the better the level of public goods it provides. At the same time, increased taxation may stimulate an increased interest and involvement of citizens in the political process, which in turn shapes political institutions and government policy. These two ideas are closely related to the idea of a social contract between government and citizens and this study will seek to shed light on both. This study will provide evidence on how public good provision across states in Nigeria responds to the reliance on taxation relative to oil revenue as well as the extent to which citizens become more politically active.